CEO: Contracts in Iraq help, but don't sustain WGI

Its work in Iraq may be grabbing the headlines, but leaders at Washington Group International say it's the other work the company is booking that is guaranteeing a strong future.

Washington Group is now the third largest contractor working in Iraq, behind industry giants Haliburton and Bechtel, company President and CEO Stephen Hanks told shareholders Friday.

But in an interview after the meeting, he stressed that the company's financial strength lies in the number and value of other contracts it has secured in the past two years.
"Iraq is a factor in the company's success, but it's not driving the company's success," Hanks said in the interview.

Hanks said the company has won contracts in Iraq worth $3.1 billion over five years, but so far the company has only received $400 million in work.
That $400 million is part of 700 projects the company currently has ongoing around the world that represents $10 billion worth of work.

Friday's shareholder meeting at company headquarters in Boise was attended by just five shareholders, as well as employees and board members.

It was devoid of any bad news as WGI leaders spoke of the company's many accomplishments over the year.
In 2003, in addition to the Iraq work, the company landed other significant contracts, including one worth $2 billion over 10 years for another chemical weapons destruction project at the Blue Grass Army Depot in Kentucky and a $1.5 billion contract over six years with Detroit Edison to do pollution control upgrades at the company's power plants.

Hanks said during 2003 the company received a total of $3.2 billion in new work, on top of a backlog of $3.3 billion in contracts. The company's net income was also up 7 percent, to $47 million.
Hanks said the company ended the year with no debt and increased its cash on hand by $69 million, to $238 million.

During the year, the company has also seen its stock more than double in price. On Friday, it closed at $34.45, down $1.66.

Despite the initial smaller contribution from the Iraq work, Hanks didn't downplay to shareholders the importance of Iraq to the company's future.
"The government intends to spend $40 billion in Iraq, and we're already signed up for $3 billion," Hanks said at the shareholder meeting.

Although Iraq isn't yet providing large chunks of revenue, Hanks said after the meeting that the company has no intention of pulling employees out of the country.
"It is a difficult environment, but it's one where we're using extreme security measures to protect our people," Hanks said.

"The very week that Fallujah was under siege, we completed a transmission line right through the heart of the city, using Iraqi workers without a single incident,"

The company is also looking toward future work in the Middle East.
Hanks said they believe the work they're doing in Iraq is giving them the experience and the contacts they need for future work in the region, even after the Iraq reconstruction is complete.

The strong performance of the company is in stark contrast to a company that just three years ago was in the midst of a major bankruptcy brought on by hidden debt in its 2000 purchase of Raytheon Co.'s construction division.

From: http://www.idahostatesman.com/apps/pbcs.dll/article?
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